Houston deserves more credit than Washington for improved trade deficit

While Washington wrestles with the nation’s burgeoning budget deficits, some good news has emerged on the other deficit front: The nation’s bloated trade deficit appears to be turning the corner, with at least one prominent economist predicting it will disappear altogether within a decade.

A recent wave of “re-shoring” of overseas manufacturing plants by U.S. chemical, auto and other companies signals the revival of U.S. competitiveness in many industries vis-a-vis Europe, Japan, China and other major trade partners. The trend got a big push recently from a dramatic drop in American natural gas prices, making the U.S. a highly desirable location for manufacturers relying on gas for energy and as a component in plastics, chemicals and other essential materials.

Rising U.S. competitiveness has stoked a major export revival since 2009, helping pull the economy out of recession. Many analysts have been surprised by how well exports have held up this year despite the slide back into recession of the largest U.S. export market — the 17-nation eurozone — and a major slowdown in the nation’s fastest growing market — China.

The export revival owes to a constellation of U.S. trends that have been building for years, including a pronounced weakening of the dollar against other major currencies, high productivity growth and subdued wage increases, and rising fuel and transport costs that make it more expensive for manufacturers overseas to deliver goods to customers in the U.S. American farmers also are helping the balance of trade by becoming beneficiaries for rising living standards in China and other emerging countries, driving farm prices to near-record levels.

On the import side, there has been a trend toward saving more and spending less among U.S. consumers and a dramatic reversal of U.S. energy consumption and production trends since 2005 that has put a lid on American oil imports and promises to turn the U.S. into a net energy exporter in coming decades. America’s gigantic oil deficit has been second only to the gargantuan trade deficit with China as a major driver of chronic U.S. trade gaps that surged to more than $800 billion at their peak in 2006.

...

The primary driver for all theses positive trends is the shale oil and gas revolution that was done without help from Washington. We are already seeing manufacturing of plastics coming back to the US where the natural gas feed stock cost a fraction of what it does in Asia. The increased oil and gas production also means fewer imports. It would be happening much faster if Obama and other Democrats would get out of the way of domestic production on federal controlled sites.

Comments

Post a Comment

Popular posts from this blog

The Hill:
Democrats are more fearful about what 2018 holds than Republicans, according to a poll released early Monday.

The new Axios survey showed 55 percent of Democrats are more hopeful personally about the new year while 44 percent are more fearful.

Among Republicans, 90 percent are more hopeful about 2018, and just 9 percent are more fearful.

When asked about the world in general, 29 percent of Democrats said they are more hopeful, compared to 70 percent who said they are more fearful.

Pollsters found 67 percent of Republicans are more hopeful about the world in general in the new year, and 32 percent are more fearful....
While this may just reflect Democrats' anxiety about being out of power, the poll also demonstrates a sense of optimism by Republicans. Except for a few of the never Trumpers, most Republicans have been pleasantly surprised by the accomplishments Trump has put in place in his first year in office. I think that is because Republicans are getting better at filte…

Washington Examiner:
President Obama used his executive powers to attack industries to lower the value of certain companies, allowing his friends in the private sector to swoop in and buy them up at reduced prices, according to Peter Schweizer’s new book Secret Empires: How Our Politicians Hide Corruption and Enrich Their Families and Friends.

The book, released Tuesday, said Obama and his administration would deem industries either destructive to the environment or exploitative for the financial and professional gain of his friends, including industries such as coal mining, offshore drilling, cash advance companies, and for-profit colleges.

The book highlighted Marty Nesbitt and Harreld Kirkpatrick III, both former basketball players and close friends of the Obamas, who launched their private equity investment firm Vistria in sync with Obama’s re-election in 2012.

Reuters/Chicago Tribune:Illinois' financial condition continued to deteriorate in fiscal 2011, leaving it the state with the lowest level of net assets in the country, as its liabilities, including money owed for public pensions, grew, according to a report released on Thursday by the state's auditor general.

Illinois' $43.8 billion deficit in terms of net assets at the end of June 2011 rose from $37.5 billion in fiscal 2010, when it also ranked the lowest among states.

In fiscal 2011, New Jersey's equivalent deficit in terms of net assets was $33.4 billion, while Massachusetts' was $22.8 billion and Connecticut's $14 billion, according to the report.

California, which shares low credit ratings with Illinois, had a $10.5 billion deficit at the end of fiscal 2011. All of the other states included in the report had positive net assets, with Texas at the top with $97.3 billion....
All states with negative net assets are blue states, although New Jersey now has a Rep…